The Key Elements of Successful Real Estate Investing in Mortgages

For those who want to start building some wealth, real estate investing can actually be the ticket that could make that happen. There are quite a few steps that need to be to followed in order to become a thriving real estate investor.

Step one: getting a real estate education. Real estate investing is a huge field and it’s easy to get overwhelmed. There are lots of ways to get educated online though books, podcasts, forums, blogs, and more. This step is essential and should not be overlooked.

Step two: choosing a niche and strategy. A niche is the kind of real estate an investor is interested in buying: single family, multi-family, commercial, etc. A strategy is the actual method of making money with that niche: flipping, wholesale, buy and hold, and more. Once the niche and strategy is figured out, half the battle is won.

Step three: creating a plan. A plan is like a road map that keeps the business on track and it makes the whole enterprise so much easier.

Step four: finding the right property. The investor needs to go out and find the property that fits his investment plans perfectly. Lots of different techniques can be used to accomplish that: using a real estate agent, buying from a wholesaler, doing direct mail, and more.

Step five: paying for the investment. Real estate costs money but what’s so awesome about it is this: if an investor doesn’t have enough money to get started on his own, he can use other people’s money by getting owner financing, or seller financing through a bank, private lender, syndication, etc. However, money are needed for a down payment of some kind, and it can range anywhere from 3.5% to 20% or more depending on the various particular financing requirements.

Step six: becoming a master of marketing. Marketing is an indispensable part of any successful real estate investing career.

Step seven: getting paid. At some point a propriety needs to be sold in order to generate positive cash flow, and move on to the next deal.

Now that all these steps of traditional real estate investing have been briefly described, investing in mortgage notes is a really low-risk, reliable way to invest.

Currently it’s not a good time to attempt risky investments that focus on appreciation, but it’s a great time to be involved with low-risk, cash flow investments such as real estate notes.

A note is simply a contract that details the terms of promise by one person to pay a sum of money to another person, and includes the principal amount, interest rate, maturity date, etc.

Here are some of the benefits of buying notes instead of real estate property:

– no dealing with tenant issues: rent, evictions, etc.
– no repairs or maintenance responsibilities;
– no dealing with contractors;
– no dealing with home owners association;
– no need to market for finding new deals and selling properties;
– no taxes and insurance;
– a lot less aggravation and a lot less liability;
– it takes less time to buy a note than a property;
– it’s a readily scalable business. An investor can buy hundreds of notes instead of just buying a few pieces of real estate at a time;
– the notes are much more liquid and an investor can sell a note and get his money back a lot faster;
– better cash flow as the internal rate of return is much higher than on renting properties.

In conclusion, real estate can be a very lucrative business proposition as long as the investor is doing his home work and makes smart, viable investments.